Tag: Business

Digital Advertising and Nike

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There’s a good article about digital advertising and Nike and how they are approaching the shifting landscape.  Some key points to the article:

  • nike_logo_new.standardTV and traditional ad spending for Nike is down 80% over the past 4 years where as digital spend is up 200%.  They want to go where the consumers are and more and more that is online
  • Nike Marketing Director Simon Pestridge says: “We don’t do advertising any more. We just do cool stuff. It sounds a bit wanky, but that’s just the way it is. Advertising is all about achieving awareness, and we no longer need awareness. We need to become part of people’s lives and digital allows us to do that.”
  • For brands there’s a fundamental need to engage consumers rather than bombard them with ads
  • Another good point in the article is that the days of interrupt-driven advertising is over.  The article claims, “Pestridge insists there will always be a place for traditional advertising, he acknowledges that the days of ‘interruptive marketing’ are over. ‘Now it’s all about deciding what you want to say and how you’re going to say it.'” In my opinion, sites that integrate a sponsors message into the content, whether paid or facilitated, is much more effective
  • They spend more time making content that they put on the web than making taglines.  Content like Ronaldinho ‘Touch of Gold’ viral video has over 30 million views (see below)

I think this shows that the content is the ad now.  Advertisers increasingly don’t want to interrupt the user. They don’t want to just inform – they want the user to engage with them.  This is the where the future is.   It’s not in banners, but rather in, as Nike says, “cool stuff.”

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Elsewhere USA is a good book

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A few months ago i read the book Elsewhere USA at danah boyd’s suggestion.  It didn’t disappoint.  While it wasn’t as good as last year’s Generation Me (which i couldn’t stop blogging about), it did have some good insights.

The point of the book is the strange paradox that is occuring in America.  People used to work and struggle so their kids wouldn’t have to.  Leiseure was something you attained at a certain income level.  Today however, this isn’t the case.  For the first time in history, the more we are paid, the more hours we work.  The rewards for working are so great they make the “opportunity cost” of not working all the more great.  The result is that there is no longer a leisure-class of elites. The rich are working harder than ever.  Now, leisure is something for the poor.  There is now a crazy measure of the income elasticity of leisure and this fundamentally changes how many of us (including me) live.   As it says in the book, elsewhere-usa-book

Obviously, this change has affected not just when we work, but also how we play, how we love, how we raise our children – how we live

Some interesting parts in the book are:

  1. There’s now a fear amoung the successful that their success isn’t geniune and an axiety that a person’s personal house of economic card is about to collapse. One interesting stat behind this is that while drinking has declined, adult use of other mind-altering substances such as Valium or marajuana has risen to the point where mature adults consume more than teenagers for the first time since these trends were tracked
  2. More and more, household income rising and falling has less to do with economic times but more about relationships.  About a quarter of American children experience two or more mother’s partners by the time they are fifteen. Over 8 percent experience three or more
  3. Similar to the African areas of Mali and Malawi, America also practices a form of polygamy.  Post coming on this soon….
  4. Religion and The Corporate man have been at odds.  A further description below:

In medieval Cathoic Europe, poverty was a virtue and to profit off one’s fellow man was considered evil.  The Protestant Reformation changed all that which led to one-on-one relationships to go and also spiritual insecurity.  This led to working harder and acculating lots of money. Success as salvation was a new incentive structure.  However, the Great Depression, the New Deal, and the trade unionism eclipsed the Protestant Work Ethic in the mid 1900’s.  There was a truce found between expansive corporate America and organzied labor such that a communitarian eithos could reign supreme.

The rift remained though as Protestants valued thrift over consumption, work over leisure, and meritocracy over social connections.  But large organizations like IBM and GM put a premium on teamwork, compromise and being a “company man.”

Today these have been resolved through the redefinition of: leisure is work and work is leisure. Consumption is investment (home equity loan is savings).  Social connectoins don’t indicate nepotism but rather social capital and entrepreneurial skill.  Loyalty is replaced by value (you show your value by calculated displays of disloyalty – displaying offers from competitors).

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While it doesn’t offer many solutions, the book is thought provoking and a good read.  I recommend you pick it up.

A Breakfast with Nolan Bushnell

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Creativity by Nolan
Image by pescatello via Flickr

Last Saturday i was part of the METal group that had breakfast with Nolan Bushnell.  It was a really thought provoking.  My favorite part was the beginning of the speech which he came out and said:

Ideas don’t mean shit.  Everyone has good ideas.  Some better than others.  Only over time and work can you own an idea.  Just having an idea doesn’t account for a thing, but if you spend a year making an idea a reality only then can you claim an ownership of it.

Prior to the breakfast, i had never heard of Nolan.  If you don’t know who he is, let me list some of his accomplishments:

  • Founded the company Atari in 1972 and grew it to $2 billion in annual sales in 1982 and at the time was the fastest-growing company in the history of American business.
  • Founded Chucky Cheese in 1977 and turned over day-to-day operations in 1981
  • Founded in 1984 Etak which was the first company to digitize the maps of the world, as part of the first commercial automotive navigation system; the maps ultimately provided the backbone for Google maps, mapquest.com, and other navigation systems; it was sold to Rupert Murdoch in the 1980s. In May 2000 the company, headquartered in Menlo Park, California, became a wholly owned subsidiary of Tele Atlas.

Let’s just say he’s quite a badass.  At the breakfast he talked about those past ventures and some of the businesses he’s involved with – specifically bring social games back to an arcade-like area and transforming the educational system.

One piece he did talk about is how to stimulate creativity within a company.  He mentioned that he has a system to do this.  Saying:

With every company i’m involved with, I get the group of “thought leaders” together in a room. I then ask them to metaphorically to “keep one foot on base” and come up with what the 2-year product line should be. These are the logical products that a smart company should invest in.  I typically like to redo the 2 year roadmap every 4 months.

After i get the “one foot on base” ideas, then I ask people for their wild and crazy ideas. Each person must supply one. I’m a Nazi about getting each and every person to submit at least one off-the-wall idea.

Then we take a break, play football and drink a beer and go to bed.

The next day we get back together and i ask the group how they’d implement their wild & crazy idea. Doing so tends to lend credibility to a crazy idea and makes them actually possible. I have found that more good ideas and companies come from these crazy ideas than the  2-year product roadmaps

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Coase's Law: Cost of Collaboration

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One of the interesting things i read in Wikinomics is Coase’s Law. I had never heard of it. Here’s the deal:

Ronald Coase was a badass and won the Nobel Prize in 1991
Ronald Coase was a badass and won the Nobel Prize in 1991

Many companies today are turning to collaborative b2B models where consumers, employees, partners, and even competitors co-create value for a company. This is all happening due to the declining cost of collaborating.

It began in 1937 when a English socialist, Ronald Coase, published a paper called “The Nature of the Firm.” Coase was both fascinated and bewildered by american industry. He toured Ford and General Motors and wondered aloud why economists could say that Stalin and communism was mistaken to try to run the Soviet Union like one gigantic company when Henry Ford adn Sloan ran their own gigantic companies (Ford & GM) in similar ways. After all, the marketplace is the best mechanism for matching supply and demand, establishing prices, and getting maximum utility from limited resources.

He studies more the cost of information. Producing things (bread, a car, a hospital ER) involves steps where close cooperation and common purpose is essential. You can only break down day-to-day tasks so much before incurring costs that outweigh the savings of doing in under the same roof. These are called transaction costs:

  1. search costs (finding different suppliers and determining if they are good)
  2. contracting costs (negotiating prices and contracts)
  3. coordination costs of meshing products and processes

Most businesses in 1937 determined it was best to do all of these in-house. All of this encompasses “Coase’s Law” which states: A firm will tend to expand until the costs of organizing an extra transaction within the firm become equal to the costs of carrying out the same transaction on the open market. Basically, as long as it’s cheaper to perform a transaction inside your firm, keep it there.

The internet makes a difference because basically now transaction costs as so low that it has become much more useful to read Coase’s Law backwards: You should shrink a company until it’s harder to do things externally than internally, then bring it in-house.

It’s interesting because Coase’s Law does both a great job of explaining why old-school corporations were so big and powerful and does an equally good job of explaining why traditional companies are on the way out and why new businesses are smaller and more nimble.

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